The digital economy and the future of work

Local authorities must also be aware of the changing nature of jobs -both locally and globally – with the advent of certain digital technologies. Low-skilled and informal work can be supplanted by automation, which would reduce the demand for such labour³⁰. Digitisation can therefore act as a threat to the livelihoods of low-skilled workers by offering alternatives to the status quo. But digital technology can also be used to offer services such as education or access to finance, which can help small business owners become more productive and eventually formalise³¹. The future of work in Africa may therefore be dependent on the ability to capitalise on the opportunities for economic growth that a digital transformation can bring, by encouraging the development of higher-level skills, including digital literacy.

Local authorities should also look to develop the local digital ecosystem. Digital transformation presents an opportunity for the multitude of African entrepreneurs. Africa is home to the highest proportion of its working age population starting a new business³². Investment in African businesses is growing, which is following a broad trajectory of increase since the beginning of the 2000s. African startups raised $1.34 billion in 2019, which is the highest ever figure for the continent33. However, venture capital funding is concentrated mainly in a few African countries, such as South Africa, Kenya, Egypt and Nigeria. Many startups find it hard to pass early stages of their development or to scale up in size because the local eco- system is not fully developed.

“In developing solutions to urban challenges, city authorities should try to engage local incubators, universities, and businesses as much as possible.

African entrepreneurism is best placed to tackle the range of complex issues that appear in urban contexts. Giving support to entrepreneurs who offer digital solutions is crucial, but there is often little space for digital industries to develop within African towns and cities

The challenge is therefore to leave room for the spontaneous emergence of responses to urban issues by the actors in the area, while at the same time establishing more formal frameworks for interaction and collaboration between state and startup, between innovator, citizen and government authority.

Digital entrepreneurial ecosystems face specific challenges to develop and grow due to weak public sector support and lack of digital/entrepreneurial skills. The forms of intervention in this field can be very diverse and are present in Sub-Saharan Africa: creation of incubators/accelerators, direct investment in high-impact start-ups, support to venture capital funds, selection process of promising start-ups and SMEs to support, innovative financing, and more.

In 2019, GSMA (a global lobby of telecoms operators) listed 618 tech hubs, incubators, accelerators, coworking spaces, and fab labs south of the Sahara³⁴.

Local authorities must also be aware of the impacts of digital technology on the local economy and national businesses. Firstly, digital hardware is predominantly a costly import, which provides little stimulus to the local economy and naturally increases the trade deficit. The sale of services, digital devices, and particularly hard- ware is also led by large multinational companies, who have global reach. Finally, digital services may also draw economic activity away from local providers. African local authorities must therefore consider the relationship they have with providers at every level of a digital transformation strategy, and try to engage open source or locally developed solutions as much as possible.

If a strategy is to involve digital devices, the issues, then, are promoting awareness of digital devices’ provenance, reusing and refurbishing digital equipment so the greatest number have access to devices in resource-effective ways that don’t contribute to climate change; and making sure solutions are interoperable. By promoting the pooling of solutions developed in-house between cities, they can anticipate and exchange on sustainable economic models and appropriate use and ownership licences.